Canadian dollar rises amid lower commodities, hopes for improved economic growth

TORONTO – The Canadian dollar traded at a six-week high Tuesday morning amid a general improvement in risk appetite on financial markets.

The loonie gained 0.38 of a cent to 98.74 cents US.

Scotia Capital said part of the reason for the gain was a report from the Reserve Bank of Australia, “which highlighted that downside risks to global growth have decreased and that growth in China has stabilized.”

That assessment followed the release of data Monday showing that China’s manufacturing sector picked up in March. The country’s Federation of Logistics and Purchasing Managers’ Index rose to 50.9 in March from 50.1 in February, which was the lowest reading in five months. Numbers above 50 denote expansion on a 100-point scale.<

Chinese manufacturing is closely watched as an indicator of global consumer sales and demand for commodities such as copper and oil.

On Tuesday, traders looked to the February report on U.S. factory orders, which was expected to show a three per cent jump following a decline in January.

Auto sales figures for the U.S. and Canada also come out during the day.

The steady recovery in the U.S. has been supporting markets in the face of financial trouble in the 17-country eurozone, where the economy continues to shrink as governments deal with high levels of debt by imposing deep budget cuts. Data released Tuesday showed that unemployment in the countries that use the euro hit a record high in January and February of 12 per cent, the highest since the currency was launched in 1999.

The tiny Mediterranean country of Cyprus has also recently deepened concerns about the future of the currency union. The worry in the markets is that the chaos surrounding the country’s bailout may have further dented confidence across the eurozone, which could further depress economic performance.

On the commodity markets, the May crude contract on the New York Mercantile Exchange dipped 20 cents to US$96.87 a barrel.

May copper was off a penny to US$3.36 a pound after closing Monday at an eight-month low while June bullion declined $7.40 to US$1,593.50 an ounce.